01—Abstract
Summary
Summary of the 10-K filed October 19, 2018. Cited figures are marked; the original filing is the authoritative source.
Jabil Inc. (JBL) reported fiscal year 2018 (ended August 31, 2018) net revenue of $22.1 billiona, up from $19.06 billion in fiscal 2017, with gross profit of $1.71 billion and operating income of $542.2 million, compared with $410.2 million the prior year.
Net income attributable to Jabil Inc. was $86.3 millionb, or $0.49 per diluted share, down from $129.1 million in fiscal 2017. The decline was driven largely by a $142.3 million provisional net tax expense under the Tax Cuts and Jobs Act, along with a $32.4 million stock-based compensation charge and $32.7 million of distressed customer charges. Management's non-GAAP core earnings per diluted share were $2.62, up from $2.11, and core operating income rose to $768.1 million from $667.0 million.
The company reported that 91.7% of net revenue came from international operations, and its largest customer, Apple, Inc., accounted for 28% of net revenue. The balance sheet and cash flow show operating cash flow of $933.9 millionc, capital expenditures of $1.04 billion, and total debt of $2.52 billion at August 31, 2018, up from $2.05 billion a year earlier. Cash and cash equivalents were $1.26 billion.
The company's order backlog was approximately $6.8 billiond at August 31, 2018, versus $4.9 billion a year earlier. Jabil repurchased $450.3 million of stock during fiscal 2018 and authorized a new $350.0 million repurchase program in June 2018. The quarterly dividend was unchanged at $0.08 per share, and the company expects to keep paying quarterly dividends of a similar amount.
Management projected fiscal 2019 net capital expenditures of approximately $800.0 million. The filing also notes that the 2017 Restructuring Plan is expected to total about $195.0 million, with $186.4 million incurred to date and annualized savings of approximately $90.0 million beginning in fiscal 2019.
The company is adopting the new revenue recognition standard effective September 1, 2018, which is expected to add $30.0 million to $60.0 million to opening retained earnings, net of tax. Pending items include the binding offer for a strategic collaboration with Johnson & Johnson Medical Devices Companies, which has been accepted for North American sites and is still subject to consultation processes for sites in Switzerland and Germany.
02—Key points
Key Highlights
- Net revenue rose to $22.10 billion in fiscal 2018 from $19.06 billion in fiscal 2017, with DMS segment revenue up 23% and EMS up 11%.
- Net income attributable to Jabil Inc. fell to $86.3 million ($0.49 diluted EPS) from $129.1 million, reflecting a $142.3 million provisional Tax Act expense; core diluted EPS rose to $2.62 from $2.11.
- Gross profit was $1.71 billion (7.7% of net revenue) versus $1.55 billion (8.1%), with management citing constrained component markets and distressed customer charges.
- Operating cash flow was $933.9 million, while capital expenditures were $1.04 billion and fiscal 2019 net capex is expected near $800.0 million.
- Customer concentration remains high: five largest customers accounted for about 48% of net revenue, and Apple, Inc. represented 28%.
- Backlog was approximately $6.8 billion at August 31, 2018, up from $4.9 billion a year earlier.
- A new $350.0 million share repurchase program was authorized in June 2018, and the $0.08 quarterly dividend was maintained.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Jabil kept $0.00.
- Revenue$22.10B100.0%
- Cost of revenue−$20.39B92.3%
- Gross profit$1.71B7.7%
- Operating costs−$1.16B5.3%
- Operating income$542.2M2.5%
- Interest, other & tax−$455.8M2.1%
- Net income$86.3M0.4%
Where FY2018 revenue went
$22.10B- Cost of revenue: $20.39B, 92% of revenue
- Net income: $86.3M, 0.4% of revenue
- R&D: $38.5M, 0.2% of revenue
- SG&A: $1.05B, 4.8% of revenue
- Interest, other & tax: $455.8M, 2.1% of revenue
Kept 0.4% as net incomeNet income $86.3M · 0.4%R&D $38.5M · 0.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed October 19, 2018Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $22.10B$19.06B | +15.9% |
| Cost of Revenue | $20.39B$17.52B | +16.4% |
| Gross Profit | $1.71B$1.55B | +10.4% |
| R&D Expenses | $38.53M$29.68M | +29.8% |
| SG&A Expenses | $1.05B$907.70M | +15.8% |
| Operating Income | $542.15M$410.23M | +32.2% |
| Interest Expense | $149.00M$138.07M | +7.9% |
| Net Income | $86.33M$129.09M | −33.1% |
| EPS (Basic) | $0.50$0.71 | −29.6% |
| EPS (Diluted) | $0.49$0.69 | −29.0% |
| Shares Outstanding (Basic) | 172.24M181.90M | −5.3% |
| Shares Outstanding (Diluted) | 175.04M185.84M | −5.8% |
05—Questions
Frequently Asked Questions
How did Jabil perform financially in fiscal 2018?
Net revenue grew to $22.10 billion from $19.06 billion, and operating income increased to $542.2 million from $410.2 million. Net income attributable to Jabil Inc. declined to $86.3 million from $129.1 million, mainly because of a $142.3 million provisional tax expense related to the Tax Cuts and Jobs Act.
What is driving the difference between GAAP and core earnings?
Core earnings excluded items such as amortization of intangibles, stock-based compensation, restructuring charges, distressed customer charges, and the $142.3 million Tax Act provisional expense. Core diluted EPS was $2.62, compared with GAAP diluted EPS of $0.49.
How concentrated is Jabil's customer base?
The five largest customers accounted for about 48% of fiscal 2018 net revenue, and 80 customers accounted for about 90%. Apple, Inc. alone represented 28% of net revenue, and the filing notes that customers can often cancel or reschedule orders.
What are the company's capital allocation priorities?
Jabil repurchased $450.3 million of stock during fiscal 2018, paid dividends of $0.08 per quarter, and authorized a $350.0 million repurchase program expiring August 31, 2019. Net capital expenditures for fiscal 2019 are projected at about $800.0 million.
What pending transactions or restructuring activity should investors watch?
A binding offer to form a strategic collaboration with Johnson & Johnson Medical Devices Companies was accepted for North American sites and is pending consultations for Switzerland and Germany. The 2017 Restructuring Plan, expected to total about $195.0 million, had $186.4 million incurred to date and is expected to yield about $90.0 million in annualized savings starting in fiscal 2019.
06—Continue